Retail grew 1.4% per year, on average, between 2001 and 2022

Retail trade registered an average annual growth of 1.4% between 2001 and 2022. The sector, which from 2001 to 2013 grew by 5.2%, has been affected by internal crises and the Covid-19 pandemic in the last ten years , which harmed the performance observed from the beginning of the century. This is what the Panorama do Comércio, published by the National Confederation of Shopkeepers (CNDL) points out.

The study brings data on the sector’s behavior over the last 22 years and points out that, from the point of view of sales, retail trade experienced four distinct moments during this period. The cycle of greatest prosperity occurred between 2001 and 2013, when retail sales volume grew at an average annual rate of 5.2%.

But because of the biggest economic recession in Brazil’s history, the sector saw performance drop by 2.8% per year, on average, between 2014 and 2016. Between 2017 and 2019, retail trade resumed growth at an average rate of 2 ,1%. The recovery, however, was hampered by the pandemic. From 2020 to 2022, the sector grew by 1.2%.

Merula Borges, a specialist in finance at the CNDL, explains that the sector is sensitive to external oscillations and that it still has not managed to resume the expected growth pace. “There are moments of more wealth there, because today we are talking about twenty years. But there are moments when the retail market fluctuated. When the economy has more difficulty growing, obviously the market also has this difficulty. And in the pandemic you have the complete closure of trade in a few moments and then you have a break in retail. Many sectors still have not had the pre-pandemic recovery”.

For the CNDL representative, the virtuous cycle of retail trade growth involves political stability in the country, adjustment of public accounts and tax and administrative reforms.

“We have seen radicalism and this greatly interferes with the approval of the measures that are necessary for the country’s growth. We need a new fiscal framework that leaves security for the market and softens the interest rate. Some reforms are important. It is. It is very important that the tax reform comes out this year, because it is a complex reform and not doing it in the first year of government makes it very unlikely that it will happen in the rest of the term”, he believes.

Segments

The survey shows that of the eight segments surveyed, only “books, newspapers, magazines and stationery” saw sales volume fall between 2003 and 2022. The 50% drop was driven by the digitization of media consumption, mainly in the case of newspapers and magazines, points out the study.

On the other hand, the office supplies segment, which includes computer equipment, grew 395% in the period, followed by “pharmaceutical and medical articles” and “other articles for personal and domestic use”. Both recorded a high of 291%.

“This has a lot to do with changing consumption habits. You see that a lot goes to office supplies, IT materials come in. So, this is related to this issue of changing habits, lifestyle, new technologies”, he explains Merula.

Interest and credit offer

Panorama do Comércio points out that projections for the banking sector indicate that, despite the high interest rates, the growth of defaults and the difficulties that some retail companies are facing, credit should advance in 2023. According to Febraban, the banking sector estimates that the supply credit throughout the year is expected to rise 8%.

Despite this, the level of the economy’s basic interest rate, the Selic, at 13.75%, has an impact, for example, on the average interest rate of corporate overdraft, which reached 322% per year. The credit card revolving rate for legal entities reached 296%.

Merula Gomes explains that high interest rates make it difficult for retailers to access credit, especially small businesses. This has contributed to companies taking less risk in taking out financing for the expansion of activities, which has an impact on the economy.

“Projects that were viable at another time, with a higher interest rate, are no longer viable and then businessmen prefer to slow down investments a little and this interferes with the economy as a whole, with the availability of jobs. , when they succeed, the income ends up being a little lower, because the market ends up in the position of having more professionals available and ends up having this effect of being able to pay less for a better curriculum”.

In February, the indicator that measures trade confidence, calculated by the Getulio Vargas Foundation (FGV), rose 3.6% in relation to January, reaching 85.8 points. But as it is below 100 points – a mark that indicates neutrality –, the indicator suggests that economic activity has lost dynamism over the last few months.

According to the index methodology, results above 100 points indicate that businessmen in the sector are optimistic, while results below this level show pessimism.

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